Truck Financing, Warranties & Insurance - Financing Cool

"Since nearly all of the custom vehicles sold by GAS are financed to some degree, sometimes you can get lower loan rates or even interest-free financing," he says. That's basically because Galpin deals with a large number of financial vendors, so sources of funding are more flexible and varied, and can be tailored to the circumstances of the individual customer. That flexibility may be essential for certain types of customers, especially those who don't own real estate.

The idea of one-stop shopping for a custom sport truck might sound pretty straightforward, but some key aspects of F&I (Finance & Insurance) need to be covered, up front. First off, those two elements are lumped together because the bank needs to protect its loan or financial exposure with proper insurance coverage.

To get a clearer picture of the arcane F&I world, we spoke with an independent consultant, Mike Shales, a former auto finance manager/director and now a trainer for dealer finance departments. He provided some insider perspectives, along with some straightforward advice for prospective customers.

We asked him whether you should finance a cool sport truck in one big package, or are you're better off paying cash and building up your ride one piece at a time? As noted, related to this financial aspect is how these mods can affect your insurance. Perhaps most important to the customer, we found out just how much more you can end up paying for the upgrades if you roll them into the loan.

As with so many financial deals, the answer to all of these questions is maddeningly simple: It all depends. That is, it depends on your credit score, employment history, amount financed, size of down payment, and length of the loan.

Out of all the variables mentioned above, "The credit history is the most important," Shales says. "But, that has changed recently, since auto sales are generally down, and banks want to make the deal."

Typically, banks prefer a score of 650 and higher. However, he notes that last year the average credit score-also called a FICA number-was 702, but is now 672. Finding out beforehand how your own credit score stacks up is a useful piece of information in getting the best rate. One thing that can lower that score is a late payment for a house loan. Shales says that, "The banks will ask, 'If you can't pay for your house, how can you pay for your truck?'"

A lower credit score and a shorter history will likely mean a higher interest rate. Speaking of rates, what can you expect, and how much does interest add to the cost of a vehicle up-fit? As of this writing, rates usually range anywhere from 6 to 20 percent, typically with a term of four to six years. As already noted, though, some customizers, like GAS, may offer special rates for qualified customers.

Let's do the math on the highest rate, a worst-case scenario. Suppose you finance $5,000 worth of custom parts. How much will you end up paying over the life of the loan? At 20 percent, that's a payment of $20 per $1,000 borrowed each month.

So, on a $5,000 loan, you might pay $120/month (with additional service fees). That's $1,440 per year for five or more years. Even with paying down on the principal, the total of interest fees charged could add up to more than the initial price of the parts!

So, when considering a high-interest loan, "Make sure to obtain a good-faith estimate for the total expense you'd pay," advises Avrek's Todd Smith. "Take a hard look at the fine print and any junk fees that might be included. Do the math on what it's going to cost you in the long run for both interest and principal."

There's another important factor to consider when you finance a custom truck: "Some modifications will cancel out the warranty or extended service contract," Shales says. "It's a gray area, depending on the type of parts, but those authorized by the manufacturer are usually OK."